Brexit

HM Treasury

UK SFTR - HM Treasury publishes guidance on TR registration arrangements post-Brexit - 30 April 2020

HM Treasury has published guidance for trade repositories (TRs) and relevant market participants on its proposed TR registration arrangements under the UK Securities Financing Transactions Regulation (UK SFTR), the retained version of the Securities Financing Transactions Regulation (EU) 2015/2365 (SFTR) post-Brexit.

HM Treasury confirms its intention to introduce legislation to enable TRs to register with the FCA or apply in advance to operate in the UK immediately following the end of the Brexit transition period, in relation to functions established by the UK SFTR. HM Treasury states that the legislation will be similar to the Trade Repositories (Amendment and Transitional Provision) (EU Exit) Regulations 2018 (SI 2018/1318) (which were made in December 2018) so that the framework for reporting derivative trades to TRs established by the European Market Infrastructure Regulation (648/2012/EU) (EMIR) operates effectively after Brexit.

The legislation will be brought forward before the end of the Brexit transition period. HM Treasury explains that the FCA will publish further information on registration in due course. The FCA's SFTR library is updated with links to material on the UK SFTR.

HM Treasury guidance on TR registration arrangements under the UK SFTR

Webpage on financial services legislation under the European Union (Withdrawal) Act 2018

Bank of England and Prudential Regulation Authority

Temporary transitional power - Bank of England and PRA publish statement on use at the end of the transition period - 30 April 2020

The Bank of England and the PRA have published a joint statement welcoming HM Treasury’s written ministerial statement, made on 25 March 2020, setting out its intention to retain the UK financial services regulators’ temporary transitional power (TTP) so that it is available for use for a two-year period from the end of the transition period. The TTP allows the Bank of England, the PRA and the FCA to phase-in changes to UK regulatory requirements so that firms can adjust to the UK’s post-transition period regime in an orderly way.

The Bank and the PRA confirm that they intend to use the TTP to grant general transitional relief to firms on a broad basis for a period of 15 months, until 31 March 2022. Therefore, in all but a few areas, PRA-regulated firms and Bank of England-regulated financial market infrastructures (FMIs) will not need to have completed preparations to implement changes in UK law arising from the end of the transition period by December 2020.

The statement confirms that the draft transitional directions and guidance, published in July 2019, will be updated accordingly.

Bank of England and PRA statement on the use of the TTP post-Brexit

Financial Conduct Authority

Temporary transitional power - FCA publishes statement on use at the end of the transition period - 30 April 2020

The FCA has published a statement, alongside the PRA’s and the Bank of England’s joint statement, updating its Brexit Policy Statement and Transitional Directions (PS19/5). The statement confirms that the FCA intends to use the regulators’ temporary transitional power (TTP) to grant transitional relief to firms on a broad basis until 31 March 2022. The TTP will be available for use by regulators for a two-year period following the end of the Brexit transition period.

The FCA explains that the TTP has the effect that, until 31 March 2022, regulatory obligations on firms will generally remain the same as they were before the end of the transition period and that UK regulated firms will not need to complete preparations to implement changes in UK law arising from the end of the transition period by December 2020.

In specific areas in which the FCA will not grant transitional relief, such as the temporary permissions regime (TPR), it expects firms and other regulated entities to take reasonable steps to comply with the changes to their regulatory obligations by the end of the transition period.

The FCA confirms that it will soon publish updated draft directions and annexes, which will include details on the application of the TTP in relation to new EU legislative requirements that become applicable during the transition period.

FCA webpage on Brexit Policy Statement and Transitional Directions (PS19/5)

TheCityUK and Economiesuisse

UK-Swiss financial services relationship - TheCityUK and Economiesuisse propose new trade agreement to enhance market access - April 2020

TheCityUK and Economiesuisse have published a joint positon paper proposing a new trade agreement between the UK and Switzerland in order to deepen financial market access between UK and Swiss financial and other related professional service (FRPS) providers post-Brexit. The paper sets out the key industry priorities in a future bespoke UK-Swiss FRPS agreement and highlights specific areas the UK and Swiss governments should address during bilateral discussions.

The paper explains that, so far, post-Brexit continuity between businesses in the UK and Switzerland has largely been achieved through several bilateral agreements, which have sought to replicate existing EU-Swiss arrangements on several matters including trade and insurance. These bilateral agreements are due to come into effect at the end of the Brexit transition period.

The paper states that the principle of financial services equivalence as applied by the EU would not be suitable for any future bilateral arrangement between Switzerland and the UK, given the comparability of the UK and Swiss approach to financial market regulation and overall supervisory frameworks. It proposes, instead, that market access to allow for the cross-border provision of financial services should be based on the mutual recognition of comparable outcomes, rather than a line-by-line comparison of the respective regulatory and supervisory regimes. This should cover the following areas: (i) banking and investment; (ii) asset management; (iii) insurance; (iv) financial market infrastructure; and (v) data and cyber security.

To ensure that markets remain open during the COVID-19 pandemic, the paper calls on the UK and Swiss governments to sign a memorandum of understanding (MoU) committed to deepening institutional, regulatory and supervisory co-operation, strengthening global financial regulatory standards and providing a roadmap towards a bespoke UK-Swiss bilateral agreement.

TheCityUK and Economiesuisee position paper on a new UK-Swiss trade agreement to enhance market access for FRPS providers post-Brexit

Press release